Inputs Monitor Regional Index: P&K Fall Strongly, Natgas Eyes Gap

Decliners tallied $41.58 to gains' 44 3/4 cents. All upward movement was confined to Farm diesel, LP and anhydrous. We have anticipated upside risk for fuels, and anhydrous signals a floor may be in place in select states. P&K moved lower on solid inventory data from Agrium last week.

Anhydrous may have already exhausted its room to the downside, and December corn futures have moved higher today, opening at $4.72 and adding a nickel in early action. Market watchers have their eye on Pro Farmer's 2013 Crop Tour, now in progress, and many expect the true condition of the nation's crop to emerge as 'worse-than-expected'. This could excite corn futures and inject some strength into the December contract -- with that, comes the risk of elevated nitrogen prices.

Fuels continue to firm and we believe the floor is in place for farm diesel. Gains for both farm diesel and LP have been modest in regionwide averages, but a closer look state-on-state shows some strong increases. Dryer fuels are expected to be in high demand at harvest and front-month natural gas is trending higher. At it's current $3.48, September natgas may look to fill the July 26 gap to $3.55. A move above that level would open upside risk to the July high of $3.83, and to our pivot at $3.91.

Brent crude is showing signs of moving higher. A move higher in WTI would signal limited upside potential for natural gas, however, a widening of the Brent/WTI spread would move September natgas higher. The current spread is in the $3.00 range with Brent on top.

We have advised filling portions of natgas needs along the way and we still believe natgas and LP are priced in the 'go-range'. If you have yet to top off needs for fall, we have advised to have 80% of fall needs covered. Prices are still favorable so check local prices and consider catching up while natgas is in its current range.